Brexit: the past, present and future impact on New Zealand
OPINION: On March 28, British Prime Minister Theresa May sent an historical letter to Brussels indicating her country's desire to leave the European Union (EU), triggering Article 50 of the Lisbon Treaty.
In the not too distant past, this move would have elicited joy and relief amongst New Zealanders, who struggled economically in the years after British succession to the European Economic Community (EEC) in the 1970s. Yet New Zealand elites backed Great Britain and Northern Ireland remaining in the EU, recognising the EU's importance as a geopolitical and economic stabiliser in world affairs.
New Zealand's pro-remain attitude towards the looming prospect of Brexit reflects a maturing relationship with the United Kingdom and the European Union. So what does Brexit mean for New Zealand and how has New Zealand reacted to developments?
In 1973 New Zealand's economy, security and identity was closely linked to, and aligned with, "Mother Britain". Yet, our leaders at the time accepted the British decision to throw off her stale colonial ties. In the face of the EEC accession New Zealand negotiators took a practical, proactive, calculated and diplomatic approach to the situation, ensuring that we gained the best trade deal with the EEC out of all of the former British colonies.
The shock outcome of the British referendum in June 2016 took New Zealand by surprise. It happened at an all-time high for NZ-EU relations – we were finalising the PARC agreement (EU-NZ Comprehensive Framework Agreement) which legalises the relationship, and the intention to begin FTA negotiations had been announced.
Trade is the most vital interest for New Zealand's foreign policy. Official statistics show that for the year ending June 2016, the EU was New Zealand's third largest trading partner (and rising), and the UK our fifth largest export market. Out of our total trade with the EU, UK trade makes up 20 per cent.
The EU's importance to New Zealand was showcased a few weeks ago when Prime Minister Bill English made his first official trip to Europe. In what was possibly a first for his National party, English visited Brussels before the UK. During his Brussels visit, the possibility of fast-tracking the EU-NZ FTA was promoted on both sides – in order to signal to the world the importance of trade liberalisation in the face of a global trend towards so-called populism. Indeed, Trade Minister Todd McLay has indicated that the EU-NZ FTA is likely to be finalised before an UK-NZ FTA. This is understandable – Britain still has at least two years to negotiate its exit from the EU and has yet to be accepted as a member in the World Trade Organisation.
In the 1970s, New Zealand had expert diplomatic negotiators. It is vital and reasonable to expect that New Zealand trade negotiators will expertly negotiate a good outcome with both the EU and UK. It is important not to choose sides. Yet substantial resources, including staff, will be needed at a time when our limited foreign policy resources have been directed away from Europe towards Asia. As then Prime Minister John Key stated: "it's going to double the effort we have to make."
When considering the possible impact of Brexit on trade, sheep meat is particularly important, with the EU our biggest destination in both volume and value. Remarkably, given that approximately 40 per cent of the total EU budget goes on the Common Agricultural Policy, the debate about the future of agricultural subsidies in the UK has been remarkably low key. Prime Minister May has promised British farmers will continue receiving the same support until the end of the negotiations with the EU but nothing further. It is fair to assume that British subsidies will be less than before.
Given that UK farmers are also sheep meat producers and exporters to the EU, this could impact on our trading relations with the EU – British farmers facing subsidy cuts will likely be wary of the prospect of New Zealand exporting more agricultural products to them under a new free trade agreement. However, there may be more need for this product on the continent if the British no longer push exports towards Europe.
Immediately after the referendum, there was hope that New Zealanders would benefit from relaxed immigration laws directed at New Zealanders. Unsurprisingly – given the consensus that Brexit was a vote against unfettered immigration – Prime Minister May recently told Prime Minister English that there would be no change.
Theresa May's letter last month means there is suddenly a probable timetable for Brexit– around 18 months. May's letter only hints at the phenomenal amount of time and manpower required to extract the United Kingdom from the European Union and to come to an agreement about the future relationship between the EU and UK. This means very limited resources for relationships with third countries such as New Zealand.
What about New Zealand's media portrayal of Brexit? The New Zealand media has portrayed Brexit as interesting to watch but something that is happening far away with little perceived direct impact on our shores. It came as a surprise, given the heavy reliance of New Zealand media on British sources, as well as lingering feelings of abandonment from British EEC accession, that the New Zealand media and elites conveyed the feeling it would be better for everyone if Britain stayed in the EU.
History has shown that we can be very successful at managing important trade negotiations, but we will need to make sure our voice is heard during and immediately after the negotiations.
* University of Canterbury lecturer Dr Serena Kelly teaches and researches the politics and external relations of the European Union and is leading a Post-Brexit perceptions project.